Financing Affordable and Workforce Housing

Partners in Innovation National SymposiumSeptember 27, 2010

Chris ParrDirector of DevelopmentDenver Housing Authority

DHA Approach to Mixed-Income HousingHousing Today

Financing Options/Tools• Low-Income Housing Tax Credits• New Market Tax Credits• Regional Transportation District Bond Project• Tax Increment Financing• Energy Tax-Credits• Improvement Districts• Denver Better Bonds• Property Tax Exemption• Urban Land Conservancy• TOD Fund• HUD• DOT• EPA• City Skyline Fund• HOME/CDBG (City/State)• Inclusionary Zoning• CHFA TOD Incentive Scoring• CFFP/EPC• Department of Health• Foundations• Everything

Financing Options/Tools• Low-Income Housing Tax Credits• New Market Tax Credits• Regional Transportation District

Bond Project• Tax Increment Financing• Energy Tax-Credits• Improvement Districts• Denver Better Bonds• Property Tax Exemption• Urban Land Conservancy• TOD Fund• HUD• DOT• EPA• City Skyline Fund• HOME/CDBG (City/State)• Inclusionary Zoning• CHFA TOD Incentive Scoring• CFFP/EPC• Department of Health• Foundations• Everything

-DHA Redevelopments

-Denver Local Innovation

-Livability PrinciplesGrantsFoundations

Three TowersIntegration of Capital Fund Financing Program, LIHTC, and Energy Performance Contracting

Construction Financing Source

Amount

CFFP Bond - PAB $14,600,000

Construction Loan - PAB

$12,750,000

EPC Lease Finance - PAB

$4,000,000

4% LIHTC Equity $6,000,000

DHA Purchase Loan $11,150,000

DHA Program Funds Loan

$3,600,000

Deferred Costs $2,900,000

Total $55,000,000

Permanent Financing Source

Amount

CFFP Bond - PAB $14,600,000

EPC Lease Financing - PAB

$4,000,000

4% LIHTC Equity $20,200,000

DHA Program Funds Loan

$16,200,000

Total $55,000,000

Three Towers

Park Avenue Redevelopment Block 5B

Park Avenue Phase 5 Estimates

90 UnitsLEED NCLEED NDGreen Communities

Code Const Cost 15,200,000Pilot Savings (620,000)Bldg w/ Pilot 14,580,000

Green Premiums 877,000Rebates (418,520)Grants (162,000)Prem less Reb/Gr 296,480

Bldg w/ Pilot plus Green Prem 14,876,480

Avg Payback 7 years

Park Avenue Solar Analysis100 kW System – Goal: Cover Significant Building Electrical Demand

Total System Value $616,000Solar Rebate ($198,720) Considerations: - Need 12-14,000 sf mounting spaceInitial Capital Requirement $417,603 - Other Building SystemsFederal Investment Tax Credit ($184,800)Final Capital Requirement $232,803 Payback Year 7

South Lincoln Redevelopment

1099 Osage: Phase I of the South Lincoln Redevelopment

• Funding Sources: CFRC (Stimulus)Low Income Housing Tax Credit EquityDHA Developer FeeDenver Better BondsDenver Skyline FundsDenver HOMEDenver CDBGDenver LandRTD Station Participation/Bike ShareXcel Rebate Program

• “Green” Efforts/Funding▫ Tracking LEED Platinum, ▫ Enterprise Green Communities, ▫ Offsetting 50% of wastewater, energy, and water consumption▫ Photovoltaic/Geothermal (Energy Tax Credits) ▫ EPA Study Grant▫ Greywater Pilot▫ Smoke Free Housing study

Stormwater Approach

Storm Water Quality LegendStorm Water DetentionWater Quality Gardens

Savings Est.: $3,000,000MITHUNSOUTH LINCOLN REDEVELOPMENT MASTERPLAN

Urban Land ConservancyTransit Oriented Development Line of Credit Summary of Terms and Conditions

Goal To preserve or create at least 1,200 units of affordable housing with transit access in the City and County of Denver.

Loan Type Revolving Line of CreditLoan Purpose AcquisitionLoan Amount $15 million acquisition line of credit , of which Enterprise

Community Loan Fund (ECLF) will participate up to $6 million. ULC will provide $1.5 million (10%) of the investment.

Maximum Amount per Acquisition

$3 million

LOC Term 10 years with no purchase to be made after Year 5Subloan Term Each acquisition subloan must be repaid within 5 years of

closing. Subloan term may be shorter if market conditions warrant.

Interest Rate 3.38% Interest will be paid quarterly.Servicing Fee 35 bps will be factored into the interest rate for the portion of

any subloan funded by non-ECLF sources

Borrowing Entity ULC or a ULC-owned/controlled single asset entity created specifically for the acquisition of any of the properties. In some cases Denver Housing Authority may be a .01% partner in order to qualify for property tax abatement.

Source of Repayment

Sale of properties to affordable housing developers or related entities.

Source of Interest Payments

Cash flow from operations of acquired property or from ULC’s general cash flow from its operations. ULC shall be required to maintain a liquid investment balance equal or greater than 1 year's interest for all outstanding debt plus a second year of interest for vacant properties and operating properties that do not meet a 1.1 debt coverage ratio ("DCR").

Location of Properties

Sites must be located within one-half mile of an existing or future light rail station or one-quarter mile of a high frequency, high volume bus corridor, within the City of Denver.

Properties to be Purchased

Emphasis will be placed on acquiring properties with interim income potential, particularly existing affordable rental housing that can be redeveloped. Mixed-use properties will also be eligible. Vacant, both improved and unimproved, properties are also eligible, but shall be limited to no more that to 25% of the properties purchased and of the outstanding funding. There is the expectation that income producing properties would cross-subsidize holding costs.

Disposition and Redevelopment

The establishment of joint ventures between ULC and other nonprofit housing developers serving Denver is a high priority and a secondary goal of this initiative. ULC may also work with for-profit developers and housing authorities to cultivate affordable housing development opportunities. The intention is to engage a developer that will ultimately develop the property early in the acquisition process. ULC will enter into an agreement with the developer that requires the organization to take down the land within the specified term of the loan and to demonstrate their capacity to perform. If situations occur where the developer with whom ULC has an agreement is not able to perform within the term of the loan, ULC may choose to act as the sole developer or may identify an alternative developer. ULC will have the right to take a long term land lease at the time of disposition to the owner. The applicable subloan will be repaid when ULC transfers the property to the developer or its related entity. In addition, ULC may be the sole developer for up to 30% of the total fund, so long as no more than one subloan on which ULC plans to be the sole developer expires in a given year.

Bringing it Together

Livability Principles HUD/DOT/EPA

• Provide More Transit Choices• Promote Equitable, Affordable Housing• Enhance Economic Competitiveness• Support Existing Communities• Coordinate and Leverage Federal

Policies and Investment• Value Communities and Neighborhoods

• Incorporate at the Site LevelInteragency CollaborativeEPA Grant

• Incorporate at the Area Level• Incorporate at the Corridor

Level

Going Further What is Sustainable?

Sustainable = + + + +

Green

The greatest way to go Green is to be SUSTAINABLE

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Elements and ObjectivesDenver HDMT

Grants/Foundations - Chasing It in New WaysGrants

▫ DOT Tiger II Planning ▫ HUD Community Challenge▫ HUD HOPE VI▫ HUD Choice

Neighborhoods▫ HUD Healthy Homes▫ USDA Hunger Free Com▫ EPA Design Assist▫ Governor’s Energy Office▫ Department of Health▫ Public Works Coupling▫ Geothermal/Solar/Wind/

Greywater▫ Local Utility Incentives

FoundationsFord

DHA/City/ ULC/Enterprise/Non-Profits

MacArthurDHA/City/ULC/Enterprise/Others

LocalColorado Health FoundationHealth Organizations